(ARA) - Has being cooped up inside all winter given you the itch to renovate, renew or expand your home? Spring is the perfect time to start home improvement projects, and interest rates make home equity loans attractive, but don't commit to anything until you've done a little "homework" first.

A home improvement project can add value to your house; however, some improvements pay off more than others. Before you decide how much to spend and what part of your house to spend it on, keep a few facts in mind.

According to RE/MAX, remodeling your kitchen can add up to 150 percent of the cost of the project to your home's resale value. Adding a second bathroom increases your resale value by 90 percent of the project cost, and a room addition, such as a family room or an extra bedroom, provides a 60 to 80 percent return. Other improvements, such as new windows and doors, or replacing the heating system, may be practical, but don't necessarily translate into resale profits.

Of course, your decision won't be based solely on the payback. "Choose an improvement project that makes sense for you and your family," says Maxine Sweet, vice president of public education for Experian, a global information solutions company. "In addition to resale value, you should take into account your family's quality of living."

Once you decide on the scope of your project, get bids from several contractors so you can compare prices and services. With these bids in hand, you'll have a better idea of how much money you'll need. But be realistic -- don't let that vision of your dream kitchen get in the way of common sense. Figure out how much debt you can take on, and plan accordingly. If your budget doesn't allow for a complete kitchen remodel, perhaps you can replace your cabinets or countertops now and put off the new appliances until next year.

Home equity loans are a great tool for financing a home improvement project. Because the loan is secured by your home, it will likely have a lower annual percentage rate, and in many states, you may gain some tax breaks on interest. With a home equity loan, the amount you can borrow is limited by the equity you have accumulated in your home. You can calculate your equity by subtracting the unpaid balance of your mortgage from the fair market value of your home. Other factors may also influence the amount you can borrow, such as your credit history, income and current financial responsibilities.

To make sure your credit history won't keep you from qualifying for a home equity loan, visit a credit reporting company online such as www.experian.com to quickly and easily access your credit report. Make sure all the information on your credit report is accurate. "If you notice anything questionable, such as accounts you don't recognize, or payment disputes, deal with those issues before applying for a home equity loan," says Sweet.

Sweet offers these tips about shopping for a home equity loan:

* Make sure all costs, fees, terms and charges are disclosed, including any penalties for early repayment.

* Find out the variances to your interest rate, if applicable, including the "cap," or ceiling, and the amount of the margin.

* Look into all conditions that may apply to your credit line, such as a minimum amount per withdrawal.

* Find out your repayment options.

* Remember, your house is being used as collateral, so be certain you are able to make your payments on time, or you risk losing your home.

Once your loan is arranged, make a final decision on a contractor for your project. Ask around among friends, neighbors and co-workers for recommendations. If you don't know anyone who has used your contractor, be sure to ask them for client references - and check them out.

A great tool for researching businesses that many people aren't aware of is SmartBusinessReports, also available through Experian at www.experian.com. These business credit reports provide consumers with background information, comprehensive financial information and credit risk facts in an easy-to-read, online format.
Other good resources to check before you sign a contract include the Chamber of Commerce, the Better Business Bureau, the State Attorney General or your local consumer projection agency. Your lender may be familiar with the contractors you're considering, and you can ask building product distributors or wholesale suppliers to see what other professionals have to say.

And remember, every home improvement project seems to take longer than anticipated, so go into it with an open mind and flexible attitude. In the end, as you're preparing dinner in your new kitchen, or enjoying family movie night in your new family room, you'll know the wait was worth it.

Courtesy of ARA Content